NEW YORK (AP) — Online pet retailer Chewy Inc. on Tuesday reported a sales shortfall for its fiscal second quarter, a sign that even spending on dog treats and other pet accessories has fallen victim to inflation.
The company based in Dania Beach, Florida, also issued sales forecasts for its current quarter and fiscal year that fell below what Wall Street had been looking for. Chewy’s stock tumbled more than 9% in after-market trading.
Chewy’s disappointing sales results underscore how shoppers are cutting back on discretionary items — even pet products that were once considered recession-proof. The shortfall comes after pet-supply retailers enjoyed strong sales during the height of the pandemic, partly driven by people who acquired pets to keep them company during lockdowns.
But apparently, pet owners are also getting sticker shock from rising prices.
“Across the pet category, pricing escalated throughout the second quarter,” Chewy CEO Sumit Singh told industry analysts Tuesday. ”Consumers in the pet category responded to growing economic uncertainty by curtailing some of their purchase activity, leading to industrywide declines in unit volume.”
Singh said that even as consumers pull back in some areas, Chewy outperformed broader industry trends in essentials like food and healthcare.
Chewy reported second-quarter net income of $22.3 million, or 5 cents a share, in the quarter that ended July 31 after reporting a loss in the same period a year earlier.
The results surpassed Wall Street expectations. The average estimate of eight analysts surveyed by Zacks Investment Research was for a loss of 12 cents per share.
The online pet store posted revenue of $2.43 billion, a 13% increase from the year-ago period. However, the results came in below Wall Street forecasts. Eight analysts surveyed by Zacks expected $2.45 billion.
For the current quarter ending in October, Chewy said it expects revenue in the range of $2.44 billion to $2.46 billion. Analysts were expecting $2.57 billion, according to FactSet.
The company said it expects full-year revenue in the range of $9.9 billion to $10 billion. That’s also below estimates for $10.25 billion, according to FactSet.